Tax season is upon us and for a lot of people this is the chance to get back on track!
(myself included)
Between Q4 traveling and holiday my debt SPIKED again - here is the plan:
OPERATION DEBT REDUCTION 2017:
Total credit card debt: 6000
Total debt from unsecured loans: 9000
Total secured debt: 70000
Secured debt is in the form of an auto lease and mortgage loan!
*Figures have been rounded up for easier breakdowns*
Looking at these figures in a big picture form would cause me to throw up, but taking the figures and breaking them into increments makes it more manageable. The method I used last year and found great success with was the "SNOWBALL METHOD" google.com, pinterest.com and daveramsey.com have easily searchable debt reduction methods and formulas - even a person of remedial excel capability can create an easy to understand and implementation strategy. Of course if you feel like you may be in way over your head you can always work with a local consumer counseling service or perhaps your local financial institution.
The fundamental idea for the snowball method is to pay the most your budget can afford on your lowest balance - while paying the minimum on the other debts. Once one is paid off roll that maximum into the next lowest balance in addition to the minimum you were already paying.
What does that look like?
This is a snap shot of a method I used in 2016 - I was able to reduce my debt by 34% in Q1 and managed to increase it by Q4 by being a bit free spirited and careless. You can easily see though how making a manageable payment on the lower debt first then rolling it in to the next debt. this is how the term snowballing or water-falling the pay offs came from.
It is a good practice and something Dave Ramsey mentions to establish an emergency fund first before tackling a debt reduction plan like this.
Tax season is a great time to set away 500-1000 for emergencies.
Lets commit to an actual emergency not a 70% clearance price that you see in the local Target store (gets me EVERY SINGLE TIME) Your local financial institution may have a savings account or certificate of deposit that may bear a higher interest than a traditional savings.
Once you do that you can quickly complete an excel sheet or other resource you find online to put the plan to work.
"If you want your plan to work, plan to work your plan!"
What if I am already behind?
The hardest part is picking up that collection call. If you can keep in communication with your debtors they are far more likely to be willing to work with you. Again use a portion of your refund if you are eligible to catch back up and set you on the path for a smoother 2017. (financially atleast)
Good luck!
#debtreduction, #smartfinances #singlemomincome #healthwealthandthestruggleinbetween #life #petiteperspectives
This is great tha k you for yhe knowledge!!!
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